| Experienced management and long track record of operations
KGPF was established in the year 2000 as a partnership firm, with Mr. Rameshwar Tawani and Mr. Karan Singh Rajpal as its current partners. Mr. Tawani brings over 26 years of experience to the firm, while Mr. Karan Singh Rajpal, a qualified second-generation leader, plays a vital role in managing its day-to-day operations. Further, the firm is a part of the Manjeet Group, which is one of the largest ginners of the country, which benefits the firm in terms of market presence and access to a well-established customer and supplier base.
Efficient working capital operations
The operations of the firm are working capital efficient as evident from low gross current asset (GCA) days of 52 days in FY2025. The inventory days stood at 21 and debtor days stood at 30 days in FY2025. On the other hand, the creditor day stood at 1, as most of the purchases are on cash basis from farmers. The bank limit utilization also stood moderate at 60.10 percent for the last six months ended February 2026.
Going forward, sustenance of an efficient working capital cycle will be a key monitorable.
Moderate financial risk profile
The financial risk profile of the firm is marked by moderate gearing, growing networth and adequate debt coverage metrics. The tangible networth stood at Rs. 41.12 Cr. in FY2025 post profit accretion. The gearing stood improved at 1.35 times in FY2025 from 1.85 times in FY2024 due to lower utilization of working capital limits and absence of any long-term debt. The TOL/TNW levels also stood improved at 1.41 times in FY2025 from 2.02 times in FY2024. However, the Debt-EBITDA levels, continue to remain high at 5.28 times in FY2025 (5.28 times in PY). The coverage indicators are adequate with interest coverage ratio (ICR) at 2.17 times. Moreover, the firm has availed long term debt of Rs. 1.60 Cr. in FY2026 to fund its capex for the solar plant. However, the overall financial risk profile is expected to remain moderate given the minimal quantum of debt availed.
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| Moderation in operating performance
The topline of the firm stood moderated at Rs. 601.90 Cr. in FY2025 from Rs. 732.17 Cr. in FY2024. The revenue has further declined in FY2026 and stood at Rs. 405.11 Cr. for 10M FY2026 as against Rs. 477.30 Cr. in 10M FY2025. The moderation is on account of decline in the volumes and price realizations. Volumes were constrained by reduced open market availability of raw material after the Cotton Corporation of India procured cotton at the minimum support price (MSP) which is higher than the market price. Further, realisations reduced due to lower demand and import competition. The EBITDA margin stood at 1.64 percent in FY2025 as against 1.78 percent in FY2024. However, the company has installed a solar plant for captive use in FY2026, the benefit of which is expected to support the overall operating margin of the firm amid the subdued operating performance.
Going forward, improvement in operating revenue and profitability will remain a key monitorable.
Susceptibility of operating performance to input price volatility, agro-climatic risk in a competitive industry
Cotton prices are regulated by the government under the Minimum Support Price (MSP) mechanism, making profitability sensitive to fluctuations in raw material costs. At the same time, the selling price of output is determined by prevailing demand–supply dynamics, which limits the firm’s bargaining power with customers and, in turn, impacts profitability margins. KGPF operates in a highly fragmented industry with a significant presence of unorganised players, which limits its pricing power. Raw material availability is closely linked to climatic conditions, as seed cotton is exposed to agro-climatic risks and production depends heavily on the monsoon and other weather patterns. Elevated temperatures in already hot regions can hinder cotton development and fruit formation, leading to reduced yields and a shortage of raw cotton.
Inherent risk of capital withdrawal in a partnership firm
The firm is susceptible to the inherent risk of capital withdrawal given its constitution as a partnership firm. Any significant withdrawal from the partner’s capital having a negative bearing on the financial risk profile of the firm shall be a key rating sensitivity.
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